Purcell v. BankAtlantic Financial Corp.

• Decision Date: 25 June 1996
• Docket Number: 94-5079,Nos. 94-4831,s. 94-4831
• Citation: 85 F.3d 1508
• Parties: 24 Media L. Rep. 2048 John D. PURCELL, et al., Plaintiffs-Appellees, v. BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et al., Defendants-Appellees. William A. SMITH, et al., Plaintiffs-Appellees, v. BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et al., Defendants-Appellees. Timothy J. CHELLING, Plaintiff-Appellee, v. BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et al., Defendants-Appellees. American Broadcasting Companies, Inc., William H. Wilson, Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1508

85 F.3d 1508

24 Media L. Rep. 2048

John D. PURCELL, et al., Plaintiffs-Appellees,

v.

BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation,

et al., Defendants-Appellees.

William A. SMITH, et al., Plaintiffs-Appellees,

v.

BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation,

et al., Defendants-Appellees.

Timothy J. CHELLING, Plaintiff-Appellee,

v.

BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation,

et al., Defendants-Appellees.

American Broadcasting Companies, Inc., William H. Wilson, Appellants.

Nos. 94-4831, 94-5079.

United States Court of Appeals, Eleventh Circuit.

June 25, 1996.

Raymond V. Miller, Jr., Kaufman, Miller, Dickstein & Grunspan, P.A., Miami, FL, Floyd Abrams, Susan Buckley, Anne B. Carroll, Cahill Gordon & Reindel, New York City, for appellants.

Alan H. Fein, Eugene E. Stearns, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Miami, FL, (Grothe, Wall, Clayton, Helton, Kennedy, Smith, Hermann, Hagedorn, Chelling, LaMar), Ray Siderius, C.R. Lonergan, Jr., Siderius Lonergan, Seattle, WA, for BankAtlantic Financial Corp.

Appeals from the United States District Court for the Southern District of Florida.

Before CARNES and BARKETT, Circuit Judges, and DYER, Senior Circuit Judge.

CARNES, Circuit Judge:

This appeal arises from the district court's denial of American Broadcasting Companies, Inc. ("ABC")'s motion to intervene and from the district court's entry of a stipulated judgment vacating the jury verdict in a class action in which ABC sought to intervene. ABC argues that due to the potential collateral estoppel effect that the jury verdict could have in a separate libel action between it and certain defendants in the class action, ABC should be permitted to intervene to argue against the vacatur of that verdict. For the reasons discussed below, we hold that ABC lacks sufficient interest in the class action to permit intervention as of right, and that the district court did not abuse its discretion in denying ABC's motion for permissive intervention.

I. FACTS AND PROCEDURAL HISTORY

In 1989, the plaintiffs, limited partners in various real estate limited partnerships, filed three class actions in the United States District Court for the Southern District of Florida against, among others, fellow limited partners Alan B. Levan and BankAtlantic Financial Corporation ("BFC"). The actions were thereafter consolidated into one class action, which involved exchange transactions proposed by Levan and BFC in which the plaintiffs' interests in the limited partnerships were exchanged for twenty-year, unsecured, BFC subordinated debentures. The plaintiffs alleged that the exchange transactions violated federal securities laws, and sought damages and rescission of the debentures.

In November 1991, ABC aired a story on the television program "20/20" about the BFC exchange transactions. The program stated that Levan and BFC knew the transactions were unfair to the plaintiffs, but that they endorsed them anyway. In February 1992, Levan and BFC filed a libel action in the United States District Court for the Southern District of Florida against ABC.

A jury trial was held in the class action suit in December 1992, which resulted in a verdict in favor of the plaintiffs and an award of $8 million in damages. In the course of reaching its verdict, the jury was asked to answer the following special interrogatories:

1. Have the plaintiffs proved, by the greater weight of the evidence, that the exchange transaction proposed by BankAtlantic Financial Corporation was "unfair" to the limited partners ...?

2. Have the plaintiffs proved, by the greater weight of the evidence, that the managing general partners, or the company or Alan Levan falsely stated in the prospectus and the transmittal letter that they believed that the exchange transaction was "fair" when they knowingly believed otherwise?

The jury answered both questions in the affirmative. The district court entered final judgment on the verdict on December 18, 1992. At that time, the plaintiffs' claim for equitable rescission had not yet been resolved.

In January 1993, Levan and BFC filed motions for remittitur and for judgment notwithstanding the verdict or for a new trial, which the district court denied. After motions related to prejudgment interest were resolved, Levan and BFC filed an appeal in July 1993. This Court dismissed the appeal in February 1994, holding that the district court's judgment was not final because it had not yet disposed of the plaintiffs' claim for equitable rescission.

In February 1993, ABC moved for summary judgment in the libel lawsuit, arguing that the collateral estoppel effect of the December 1992 jury verdict in the class action case precluded a judgment against ABC in the libel lawsuit. The magistrate judge in the libel lawsuit recommended that summary judgment be granted in favor of ABC because the jury's verdict in the class action case preclusively established the substantial truth of the "20/20" broadcast. However, the district court in the libel lawsuit stayed the proceedings until the equitable rescission claim could be disposed of in the class action case.

After the magistrate judge recommended summary judgment for ABC in the libel lawsuit, Levan and BFC began working on a settlement with the plaintiffs in the class action case. They reached an agreement in which the defendants would pay the plaintiffs the full amount of the damages that the jury had awarded them, plus interest, ¹ in exchange for a stipulated motion to vacate the jury verdict and resulting judgment. Levan informed the district court in the libel lawsuit of the impending settlement in the class action with the result that the district court rejected the magistrate's recommendation of summary judgment in favor of ABC, and referred the case back to the magistrate for further consideration in light of the impending class action settlement.

Learning of the class action settlement agreement, ABC was understandably unhappy about the provision for vacatur of the jury verdict and judgment, upon which it was relying in the libel lawsuit. ABC moved to intervene in the class action for the purpose of opposing the vacatur of the jury verdict and judgment. For obvious reasons, Levan and BFC, two defendants in the class action, opposed ABC's motion to intervene. The plaintiffs in the class action also opposed it, because their certain and relatively prompt receipt of the $8 million payment, plus interest, through the settlement agreement was expressly conditioned upon the vacatur. The district court denied ABC's motion to intervene. After a hearing on the proposed settlement, the district court approved the class action settlement agreement and entered a final judgment vacating the jury verdict and the final judgment entered thereon.

Thereafter, in April 1995, the magistrate judge in the libel lawsuit recommended that ABC's motion for summary judgment be denied in light of the vacatur of the jury verdict in the class action.

This is ABC's appeal from the denial of its motion to intervene and from the district court's final judgment approving the settlement and vacating the verdict and judgment in the class action case. ² The plaintiffs have moved in this Court to dismiss this appeal arguing that the appeal is moot because the settlement extinguished the "case or controversy" that was before the court, and that ABC lacks standing to challenge the settlement agreement. We ordered that the motion to dismiss be carried with the case, and we now deny it. ³

II. DISCUSSION

Before the class action parties began negotiating their settlement agreement, the magistrate judge in the libel lawsuit had recommended summary judgment in favor of ABC because the class action jury verdict preclusively established the substantial truth of the "20/20" broadcast. ABC argues that this recommendation gave it a sufficient interest in the settlement agreement to entitle it to intervene in the class action. On the merits, ABC argues that the district court's approval of the settlement agreement providing for the vacatur of the jury verdict was an abuse of discretion because that agreement was designed to manipulate the judicial system, and the Supreme Court's decision in U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, --- U.S. ----, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994), disapproves of such settlement agreements.

We do not reach ABC's argument regarding the propriety of the district court's approval of the settlement agreement, because, as we explain below, we are persuaded that the district court properly denied ABC's motion to intervene. See, e.g., Chiles v. Thornburgh, 865 F.2d 1197, 1212 (11th Cir.1989) ("If we find that the district court's disposition of the motions to intervene was correct, then our jurisdiction evaporates...." (citation and quotation marks omitted)).

A. Intervention as of Right

In this circuit, a movant must establish the following requirements to intervene as of right under Federal Rule of Civil Procedure 24(a)(2):

(1) his application to intervene is timely; (2) he has an interest relating to the property or transaction which is the subject of the action; (3) he is so situated that disposition of the action, as a practical matter, may impede or impair his ability to protect that interest; and (4) his interest is represented inadequately by the existing parties to the suit.

Chiles, 865 F.2d at 1213. We review the district court's denial of ABC's motion to intervene as of right de novo. See Federal Sav. & Loan Ins. Corp. v. Falls Chase Special Taxing Dist., 983 F.2d 211, 214-15 (11th Cir.1993). "Once a party establishes all the prerequisites to intervention, the district court has no discretion to deny the motion." United States v. State of Ga., 19 F.3d 1388, 1393 (11th Cir.1994).

The plaintiffs and the defendants in the class action focus primarily on ABC's failure to establish the second requirement...